This Is AuburnElectronic Theses and Dissertations

Effects of Responsibility Center Management System on Financial Performance Indicators among 50 Public Universities




Long, Jeff

Type of Degree

PhD Dissertation


Education Foundation, Leadership, and Technology


The purpose of this study was to determine if a decentralized budget system, such as a Responsibility Center Management (RCM) system, improves a university’s key performance indicators (KPIs), specifically, operating revenue, tuition revenue, contracts and grants revenue, and operating expenses. There are limited empirical studies that examine whether or not a school that has implemented an RCM system is better off for doing so. This quantitative multiple case study was designed to analyze whether there are patterns or trends among schools that implement an RCM system and those that have not, based on the financial performance of the institution. The study compared annual changes in university financial indicators, over the same ten-year period from 2007-2016. Analyses of the data suggested that in most instances the application of an RCM budget model did not result in a significant annual improvement to financial results among the four key financial indicators (operating revenue, tuition revenue, contracts and grants revenue, and operating expenses). Further, for those specific years in which the results of this research showed there was a significant financial improvement by RCM schools, there was no statistical difference when the researcher considered the length of time a school had been implementing an RCM system. Although the findings of this study seem to indicate in most instances there are not any direct financial improvements to the specific financial indicators tested, by implementing an RCM budget system, the study did show there were no years in which a school was worse off financially for using RCM. The implications of this study are particularly important for higher education leaders and administrators that are considering whether to implement an RCM system or considering whether to continue using an RCM system. The findings can help leaders at colleges and universities better understand and manage financial expectations of implementing such an RCM system, as the direct financial improvement attributed to RCM may be limited.